Monday, September 15, 2008

Obama's Tax Plan

Senator Barack Obama has proposed "Change" as his Presidential Campaign motto. Part of that "Change" would involve significant increases in taxes and large increases in Government spending. Yesterday Paul Gessing authored this article Obama's change could cost big bucks to detail the effect of the Obama Tax Plan.
When it comes to Americans' pocketbooks, Obama has laid out a clear vision that calls for a bigger, more costly government. Unfortunately, at a time when economic growth is slowing at least partly as a result of misguided government policies such as ethanol subsidies, refusal to allow oil companies access to oil, federal encouragement of the housing bubble, and the costly Iraq war, taking an even bigger share for government is bound to only prolong our current slowdown. [Emphasis mine]
Can we afford Bigger Government? How will we pay for more costly government? Mr. Gessing paints a clear picture in his article of what this means for all of us.
So what does Obama propose? To be sure, he does have a few tax cuts aimed at middle- and low-income Americans sprinkled through his plan. His "Making Work Pay" credit would offset payroll taxes on the first $8,100 of earnings, generating savings of up to $500 per person or $1,000 per family. His campaign says that will eliminate income taxes for 10 million low-income Americans.
On the surface, this sounds like a pretty good idea, and certainly will appeal to a large segment of the voting public.
But we already have the Earned Income Tax Credit [EITC] for low-income wage earners. The IRS estimates that nearly one-third of EITC payments - more than $10 billion annually - now are wasted in overpayments. Is it really wise to create an entire and complicated new credit that would be subject to the same abuses? [Emphasis mine]

Our government spends our money (Tax Dollars) without much thought about where the money comes from. We need to balance the Budget, which under Obama's Tax Plan will institute heavy tax burdens on the "rich".
The centerpiece of Obama's plan is to end the Bush tax cuts and allow the top two tax rates to return to 36 percent and 39.6 percent. He would also phase out personal exemptions and deductions for those with income in excess of $250,000.
So what's wrong with making the "rich" pay for the rest of us?
Again, with an eye toward punishing those who have achieved economic success, Obama plans to end the Social Security payroll-tax cap for those making more than $250,000. The cap is currently set at a more reasonable $102,000. [Emphasis mine]
Note the word punishing in the above paragraph, because that what Obama's Tax Plan really does. It doesn't matter that they can afford it. It matters that we shift monies from one class to another. This is redistribution of wealth, and ultimately punishes all Americans.
Under Obama's plan, these individuals will face a tax rate of 15.65 percent from payroll taxes and the top income-tax rate of 39.6 percent for a combined top rate of more than 56 percent on each additional dollar earned. [Emphasis mine]
One of the most overlooked facts is this: While some of these "rich" people are CEO's of large major corporations, many are small business owners. These small business owners are the ones who provide jobs for America. By increasing the Tax Burden on the small business owner, these same businesses have less dollars to provide the jobs we need. This is when jobs go overseas.
As if those proposals were not enough to weigh the U.S. economy down, Obama plans to nearly double the top dividends and capital-gains rate from the current 15 percent rate to as high as 28 percent. Indeed, while most tax cuts may result in slight revenue declines even as they spur economic growth, Bush's dividend and capital gains tax cuts actually have increased federal revenue. Obama would be wise to reconsider these particularly destructive tax increases. [Emphasis mine]
Most Americans have some form of investment program. A 401(k) for instance. These programs invest heavily in Companies that pay dividends. Tax increases on Dividends results in lower yields and slower growth not only for these Companies, but also for each of us personally.

Finally, consider this.
...Obama's massive payroll-tax increase abandons any pretext of Social Security's being "social insurance," as opposed to just another welfare program. It would massively expand government with almost no positive effect on Social Security's solvency.

Obama's plan would keep Social Security in the black for only three more years. Annual deficits would hit in 2020, instead of 2017, and by the 2030s the system would still run an annual deficit exceeding $150 billion.
If elected, President Obama would institute increases in Government size and spending. This would have the effect of slowing the economy, cutting jobs and increasing the National Debt. What good is a Tax Cut for the Middle Class, if they have not earnings to Tax? Of the Developed Nations of the World, the US has the second highest Corporate Tax Rate Now. We don't need and can't afford to increase the Tax Burden even more.

With a Democrat in the White House, and a Democratic Majority in the Congress, Bigger Government, More Spending and Higher Taxes are almost guaranteed. This is not the kind of "Change" we need. This is not the kind of "Change" most of the voters expect, but it is what we all will receive.

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